CHAPTER 3

SOLUTIONS TO IMPROVING CREDIT QUALITY AT BIDV, HAI BA

TRUNG BRAND
3.1 Targets of credit activity of BIDV, Hai Ba Trung brand for small and medium
enterprises
3.2 Solutions to improving credit quality for small and medium enterpreses at
BIDV, Hai Ba Trung brand
3.2.1  Building a consistent strategy, credit policy consistent with small and medium
enterprises
3.2.2  Constantly improving their professional and moral quality of loan officers and
using staff appropriately
3.3 Recommendations
In banking business, credit is the most risky activities. The loss in credit activities
not only influence on the bank, also affect depositors, the save of banking system and the
stability of economy. Defending and limiting credit risk is not only responsibility of
banking industry, but also combination of Government and related ministry and other
sectors. I have some recommendations:

3.3.1 Recommendations to the Vietnammese government

 Complete policies to SMEs
Until Government issued decree 90/2001/NĐ-CP, support activities for SMEs
develop strongly reflected the rapid growth in both quantity and quality of SMEs. it also
means creating opportunities to invest capital and lending services in DNV & N, but in
reality the distance and the success of the lending SMEs is very limited. To solve these
problems, the Government should continue to reform institutions for SMEs.
- Investment policies: Areas where SMEs focuses mainly are commercial and llife
service, and little industry. The State should adopt policies to encourage enterprises
towards industrial investment. There should be incentives for traditional industries. It
should promulgate documents guiding investment laws, guiding and spreading for SMEs
and disclosure investment incentives policies
-Land policies: state should have land policies and support the production site,
ensure the basis for land leasing and delivering. Also edit ordinance on registration of
security transactions, thus facilitate SMEs to complete the procedures of mortgage loans
from banks.
- Tax Policy: There should be preferential tax policies for new-founded SMEs,
thus promote the potential of it. When tax rates are too high, the SMEs tend to evade
paying tax by taking advantage of gaps law.
- In addition, the State should perform thorough, uniform accounting statuses for
SMEs, there are many businesses used many accounting systems to calculate, and has its
own system of loans at banks. The State should consider revising the accounting regime
to suit the requirements and the level of management of SMEs, to create conditions for
enterprises to make public the financial condition annually, thus consolidating and
creating trust for partners in business relationships.
- Develop unified information system on SMEs, which helps banks improve
business process testing, as well as provide information for funders and managers.
 Encourage banking activities
Governments should promulgate and perfect the institutions to create comfortable
environment for banks to develop and enhance their competitiveness in the overall
market and market segments of SMEs in particular, thus meeting the requirements of the
international economic integration process, especially when Vietnam becomes an official
member of the World Trade Organization WTO.

3.3.2 Recommendations to the State Bank

State bank needs to improve more quickly the legislation on the activities of banks
to create uniform and equality legal environment, for all types of enterprises can access
credit capital effectively. State Bank need to avoid discrimination between different types
of enterprises, especially difficult for the SMEs.
 -Credit Information Center of the State Bank CIC should develop further its role in
providing information fully, promptly and accurately. CIC need to incorporate tightly
with commercial banks to fully exploit information about customers. Thus, commercial
banks can have enough information to determine the exact loan and debt collection.
- Should have its own mechanism for lending to SMEs to match the movement and
demonstrate the important role of this type of enterprise in the economy. Should apply
different interest rates for overdue divided by different criteria, according to objective
reasons and subjective reasons.
- Strengthen the inspection and control banks and other credit institutions to detect
and correct errors promptly and prevent possible loss. Accurate, quick and efficient
activities not only increase operational efficiency of banks, also promote the
competitiveness of Vietnam's banking system in the future.

3.3.3 Recommendations to the BIDV

 Firstly, BIDV should build an appropriate credit policy to encourage SMEs’
development, loosen procedure and loan conditions. Morever, BIDV has a system
of financial reports with standarded content to give SMEs customers that create a
common standard and reduce processing time for loan officers.
 Secondly, BIDV, Hai Ba Trung branch can be help a fund by BIDV for
professional training, professional knowledge of banking staffs in general and
banking loan officers in particular.
 Thirdly, BIDV coordinates closely with the State bank to organize effectively
credit information programs, improving credit quality. Thus, the branches avoid
risk in the best way.
 Fouthly, BIDV strengthens inspection activities, internal control system in whole
system to regulate the activities of branches and banking staffs.
 Fifthly, BIDV strengthens the technological capacity in equipment and utility
programs, application software program for credit activities better.
  Sixly, BIDV should open tranning courses to improve new professional
knowledge in fields of information technology, electronic commerce, electronic
banking for BIDV’s leaders and the managers of the branches. In addition, BIDV
organize seminar about political economic, domestic and international financial
markets to equip staffs with based knowledge when entering the WTO.
3.3.4 Recommendations to small and medium enterprises
Review and adjust business strategy suitable for the domestic market and
international market since Vietnam is an official member of the World Trade
Organization WTO. Opportunity to develop rapidly and challenges for SMEs. To
enhance the role of credit for the development of the SMEs, besides the bank must
improve the quality of business activities in general and the credit in particular, it requires
the SMEs to take action to remove legal obstacles and barriers to access to credit to
improve their performance.
 Firstly, step by step improve the management of SMEs, especially for
leaders. Also need to raise the level of officials and employees in their enterprises
to quickly absorb new technologies, increase labor productivity, achieve
production efficiency in the business, bringing trust to banking .
 Secondly, the SMEs should develop investment projects, business strategies in line
with management capacity, capital, technology and people, especially in the
situation of integration today and must have plans to add and increase capital of
the business in various forms, actively approach and find out the banking services,
and expand market research and marketing to bring business to external market.
 Thirdly, the SMEs need to gradually develop their reputation for banks by
business capacity and efficiency of capital use such as enhancement of
management capacity and business operators, compliance and transparency of the
regimes on financial accounting, production and business activities as prescribed
by law, the renovation work from awareness to detail in whole fields to confirm
their credibility of SMEs for the banks.
 Fourthly, SMEs must fully comply with their reporting, financial statistics to
create accurate information for banking staff in the evaluation client’s prestige and
keeping track of loans, and create a trust with the banks about status and prestige
of themselves enterprises
 Fifthly, SMEs improve the equity of the business to meet bank’s requirements of
equity and collaterals.